Zurich Financial Services, the European insurance group, expects its future China business to rely heavily on Chinese domestic enterprises’ activities overseas, in addition to its existing client base of foreign corporations.
James Schiro, chief executive, said Chinese companies facing an array of uncertainties abroad would become a driver of growth because they would need more coverage – especially in the fields of property, casualty and workers’ compensation.
“It’s [about] how we help them protect their risk,” Mr Schiro said in an interview with the Financial Times. “Where they go and where they want to be, we have to help serve them.”
China’s companies have had a mixed record abroad and are expected to require better risk protection in highly-regulated markets such as the US and Europe as well as in less developed environments such as Africa and Latin America.
ZFS is a relative newcomer to China’s general, or non-life, insurance sector. Less than a year ago it was granted approval by government regulators to open a wholly foreign-owned general insurance branch in Beijing.
Since then, the Swiss group has been actively marketing property and casualty options to large and medium-sized Chinese companies. Mr Schiro said ZFS’s broad presence in more than 120 countries was a major advantage for cross-border coverage.
Mr Schiro said Zurich might, for example, insure a Chinese company seeking natural resources in Australia or China-made cars which are shipped to the US for storage and sale. ZFS says it is the largest insurer of car dealerships in North America. At present, the largest portion of ZFS’s insurance business in China comes from foreign companies with sizeable investments in the country.
China’s susceptibility to natural catastrophes such as droughts will also spur demand for property coverage, Mr Schiro predicted. He estimated that only 10 to 15 per cent of such losses were insured in developing nations compared to 90 per cent in western countries. “Insurance provides residual capital for recovery,” he said.
On the life assurance side, ZFS estimates that about 8 per cent of the company’s annual premium equivalent, a broad measure for new premiums, now comes from China. “We would expect that number will grow exponentially,” Mr Schiro said.
ZFS has a 19 per cent stake in New China Life Insurance Company, ranked the country’s fourth-largest provider. NCL has been beset with problems in recent months, but ZFS also has a regional life business based in Hong Kong focusing on high net-worth individuals and expatriates.
Many European and US financial services groups are eager to expand life and non-life investments in China. Sogecap, the life insurance subsidiary of France’s Société Générale, earlier this month opened a new representative office in Beijing, its first in Asia.